Guides

Iowa restaurant pay rules (2026): what to pay tipped and non-tipped staff

Mays TeamMay 6, 2026
The Forecast in Mays for the week of April 27, 2026: each day's projected sales from the point-of-sale history next to the actual sales, with the week's projected labor % from the schedule

Iowa's minimum wage has been $7.25 an hour since January 1, 2008, and state law schedules no raise (Iowa Code ch. 91D). Iowa allows a smaller tip credit than the federal law does, at most 40% of the minimum wage, so tipped staff get at least $4.35 an hour in cash wages (Iowa minimum wage poster). New hires can start at $6.35 for their first 90 calendar days (Iowa Code ch. 91D), but the federal law has no such rate for adults: an employer it covers pays $7.25 from day one to anyone 20 or older (DOL Fact Sheet #32).

This page puts Iowa's figures in one place. It covers what you owe tipped staff like servers and bartenders, what you owe everyone else, and two example weeks with the math shown. Every figure links to the official page it comes from.

Updated September 24, 2026: these figures are still current. Iowa's minimum wage is $7.25 an hour ($4.35 cash wage for tipped employees). No increase is scheduled.

This is general information, not legal advice. Whether a rule applies can depend on your business's size and your own facts; the note at the end says more.

Iowa pay rules at a glance

As of May 6, 2026:

Rule

Iowa

Minimum wage

$7.25 an hour, since January 1, 2008

Tipped employees: minimum cash wage

$4.35 an hour, if you take the tip credit

Maximum tip credit

$2.90 an hour

Who counts as tipped

Customarily and regularly receives more than $30 a month in tips

Overtime

1.5× the regular rate after 40 hours in a workweek; no daily overtime

Meal and rest breaks for adults

Not required by Iowa or federal law

Next change

None scheduled

Sources: Iowa Code ch. 91D; Iowa minimum wage poster; US DOL, overtime; Iowa DIAL, wages.

Other Iowa rates:

  • initial employment rate, an employee's first 90 calendar days with the employer: $6.35 an hour

Small businesses. Iowa's minimum wage doesn't apply to a business with annual gross sales under $300,000 (Iowa Code ch. 91D). The federal law can still cover it, through staff whose work regularly involves commerce across state lines (DOL Fact Sheet #14), and an Iowa employer follows whichever law is stricter (Iowa minimum wage poster).

Who counts as a tipped employee in Iowa

In Iowa, a tipped employee is someone who customarily and regularly receives more than $30 a month in tips (Iowa Code ch. 91D).

In a restaurant that usually means servers, bartenders, bussers and counter staff who serve customers, including baristas who get tips. Cooks and dishwashers usually aren't tipped employees. Only tips the employee actually receives count. If someone works two jobs, say a server who also works prep shifts, the tip credit applies only to the hours in the tipped job (DOL Fact Sheet #15).

Iowa's tip credit is for employees of a restaurant, hotel, motel, inn or cabin, and an employee whose tips fall short of the amount you credit can appeal to the state (Iowa Code ch. 91D).

What you must pay tipped staff in Iowa

Servers, bartenders, bussers and baristas who get tips can be paid a lower cash wage, with part of their tips counted toward the minimum wage. That's the tip credit, and it comes with conditions:

  • Pay at least $4.35 an hour in cash wages. That's the $7.25 minimum wage minus the most you can credit from tips, $2.90 (Iowa minimum wage poster).
  • Cash wages plus tips must reach $7.25 for every hour worked, week by week. If tips fall short in a workweek, you pay the difference by the regular payday for that week (DOL Fact Sheet #15).
  • Tell them first. Before you take the tip credit, tell each tipped employee, in writing or out loud: the cash wage you pay, the tip credit you claim, that the credit can't be more than the tips they actually get, that they keep all their tips except through a valid tip pool, and that the credit doesn't apply unless you've told them all this (DOL Fact Sheet #15).
  • Overtime is figured on the full minimum wage. An overtime hour is worth 1.5 × $7.25 = $10.875. After the $2.90 tip credit, you pay at least $7.975 of it in cash wages (DOL Fact Sheet #15).

You don't have to take the tip credit. If you pay tipped staff the full $7.25 an hour, their tips are all on top, there's nothing to make up at the end of the week, and you can put kitchen staff in the tip pool (see below).

Iowa's credit is the smaller one. At 40% of the minimum wage, the most you can credit is $2.90 an hour, so the cash wage is $4.35, not the federal $2.13. An employer the FLSA covers pays the Iowa figure, because it follows whichever law is stricter (Iowa minimum wage poster).

What you must pay non-tipped staff in Iowa

Cooks, dishwashers, prep cooks, and cashiers or counter staff who don't get tips are paid like any other hourly employee:

  • At least $7.25 an hour for every hour worked (Iowa Code ch. 91D). No tip credit applies.
  • The same goes for a tipped employee's hours in a non-tipped job, like a server's prep shift (DOL Fact Sheet #15).
  • Overtime is at least 1.5 times their regular rate for hours over 40 in a workweek. At $7.25 an hour, that's $10.875 (US DOL, overtime).
  • Can they share in the tip pool? Only if you take no tip credit and pay everyone in the pool at least the full minimum wage. If you take a tip credit, a pool you require can include only staff who customarily and regularly receive tips (US DOL, tips). Managers and supervisors can never take from the pool.

New hires. For an employee's first 90 calendar days, counted from their first day of work, Iowa allows $6.35 an hour; someone you rehire within 3 years gets the full rate from the start (481 IAC ch. 230). The federal law's lower starting rate is only for workers under 20, so an employer the FLSA covers pays $7.25 to a new hire 20 or older (DOL Fact Sheet #32).

Worked examples (made-up numbers)

The names, hours and tips below are made up. The rates are Iowa's as of May 6, 2026.

A server's week: when you have to top up

Sam is a server paid the $4.35 cash wage. He works 30 hours in each of two weeks: a busy one with $330.00 in tips and a slow one with $50.00.


Busy week

Slow week

Hours worked

30

30

Cash wages (30 × $4.35)

$130.50

$130.50

Tips received

$330.00

$50.00

Cash wages + tips

$460.50

$180.50

Minimum for the week (30 × $7.25)

$217.50

$217.50

You pay on top

$0.00

$37.00

In the slow week, $50.00 in tips covers only part of the $87.00 tip credit (30 × $2.90), so you pay the difference by the regular payday: $217.50 − $180.50 = $37.00. In the busy week you owe nothing extra, and every dollar of tips is still Sam's.

A cook's week with overtime

Ana is a line cook paid the Iowa minimum wage, $7.25 an hour. Over five days she works 9, 9, 9, 9 and 10 hours: 46 hours in all.


Hours

Rate

Pay

Regular hours

40

$7.25

$290.00

Overtime hours (over 40)

6

$10.875 (1.5 × $7.25)

$65.25

Total

46


$355.25

Overtime is counted by the workweek, and hours can't be averaged across two weeks: a long week earns overtime even if the next one is short (US DOL, overtime). Bonuses can change the rate too; see Time clock, breaks and overtime: first-month payroll mistakes to avoid.

Tip pooling rules in Iowa

No specific Iowa rule found — federal rules apply (481 IAC ch. 233). Under federal law (US DOL, tips):

  • The business, its managers and supervisors never keep employees' tips. A manager can't take anything from a pool; they may keep only tips for service they directly and solely provide. An owner with a real stake who helps run the business counts as a manager too.
  • With a tip credit, a pool you require can include only staff who customarily and regularly receive tips: servers, bartenders, bussers, counter staff who serve customers.
  • Without a tip credit, when everyone in the pool gets at least the full minimum wage, you can include cooks and dishwashers.
  • Card fees: you may reduce a card tip by the percentage the card company actually charges you, and no more (DOL Fact Sheet #15).
  • Service charges aren't tips. Money you share with staff from a mandatory service charge is wages, and it counts in the regular rate for overtime (DOL Fact Sheet #15).
  • Pay pooled tips out by the regular payday for the week or pay period (DOL Fact Sheet #15).

Iowa's own tip rules follow the federal ones: when servers share tips with bussers, what each keeps counts as that person's tips, and a service charge isn't a tip (481 IAC ch. 233). Tips can never be deducted from wages (Iowa Code ch. 91A).

How to split a pool fairly, with a worked example: Tip pooling for new restaurant owners.

Overtime in Iowa

Iowa has no overtime law of its own (Iowa minimum wage poster), so the federal rule applies: non-exempt employees get at least 1.5 times their regular rate for hours over 40 in a workweek (US DOL, overtime).

A workweek is any fixed, recurring stretch of seven days that you choose, and hours can't be averaged across two weeks. There's no daily overtime, no double time and no seventh-day premium under Iowa or federal law, and weekend or holiday hours don't earn a premium by law.

For tipped staff, overtime is figured on the full minimum wage, not the cash wage (see the tipped section above).

Breaks in Iowa

  • Meal breaks: No specific Iowa rule found — federal rules apply (Iowa DIAL, wages). The FLSA does not require meal periods. A bona fide meal period (typically 30+ minutes) is not work time (US DOL, breaks).
  • Rest breaks: No specific Iowa rule found — federal rules apply (Iowa DIAL, wages). The FLSA does not require breaks. Short breaks an employer offers (about 5 to 20 minutes) are paid work time (US DOL, breaks).
  • Minors: Under 16: a break of at least 30 minutes when employed five hours or more in a day; it may be paid or unpaid (Iowa Code ch. 92).

Other Iowa rules that affect pay

  • Paid sick leave: No specific Iowa rule found — federal rules apply (Iowa DIAL, wages). No federal paid sick leave requirement. The FMLA provides unpaid, job-protected leave (up to 12 weeks) where it applies (US DOL, sick leave).
  • Food handler training: A certified food protection manager is required, not a card for every employee. Who: at least one certified food protection manager per establishment (not every food employee) (481 IAC ch. 31).

Paydays, deductions and pay statements

  • Paydays. Pay monthly, twice a month or every two weeks on regular paydays, no more than 12 days (not counting Sundays and holidays) after the end of the period the wages were earned in (Iowa Code ch. 91A).
  • Final pay. Someone who leaves is paid by the next regular payday (Iowa Code ch. 91A).
  • Deductions. You can't deduct a cash shortage in a till two or more people use (Iowa Code ch. 91A), or charge an employee for a uniform that carries your logo or colors (Iowa DIAL, wages).
  • Pay statements. Every payday, give each employee a statement of the hours they worked, the wages they earned and the deductions (Iowa Code ch. 91A).
  • Late wages cost more. Unpaid wages carry liquidated damages of 5% of the amount for each day, not counting Sundays, holidays and the first 7 days after payday, up to the amount unpaid (Iowa Code ch. 91A).

Teenagers

  • Hours for under-16s. No work before 7 a.m. or after 9 p.m. (11 p.m. from the start of June through Labor Day), and while school is in session no more than 6 hours a day or 28 a week; 16- and 17-year-olds can work the same hours as adults (Iowa Code ch. 92). An employer covered by both state and federal child labor law follows whichever protects the minor more (Iowa DIAL, child labor).
  • Serving alcohol at 16. In a restaurant, 16- and 17-year-olds can serve alcohol while food is being served, with a parent's written permission on file and at least 2 employees aged 18 or older there (Iowa Code § 123.49).

Local rates in Iowa

Iowa law bars cities and counties from requiring private employers to pay a minimum wage other than the state or federal one, or to provide employment benefits, such as paid sick leave, that state or federal law doesn't require (Iowa Code § 331.304). The same rule binds cities (Iowa Code § 364.3), and it reaches leave, hiring practices and scheduling too. Any ordinance adopted before March 30, 2017 that broke it became void that day. So the state's $7.25 minimum wage applies everywhere in Iowa, and there's no local rate table for Iowa.

How Mays helps

Mays runs the schedule, time clock, tip pool and payroll export for each location. For Iowa pay rules, that means:

  • Positions and wages. Give each position a default hourly wage, for example the tipped cash wage for servers and at least the minimum wage for cooks. Turn on Labor law compliance and Mays looks up each location's minimum wage from its address and warns you when a position's default wage, someone's hourly wage or a punch is below it, comparing tipped positions with the tipped cash wage when it has that figure. It never blocks the save.
  • A tip pool per location. Split pooled tips by hours worked, equally or by FTAR score, per pay period or day by day, and choose which positions receive. Until you pick positions under Who receives, the positions marked Tipped share the tips; if no position is marked, everyone who worked does, cooks included. So if you take a tip credit, tick Tipped position only on positions whose staff get tips, or pick them yourself. A punch with no position counts under its shift's position, or else the person's primary or only position at that location; with neither, its hours get no share, and the tip pool card shows how many punches that leaves out. Leave managers and admins out of the pool is on by default, so leave it on. The tips come from your connected POS at that location (Square or Union) or from tips synced with 7shifts time punches, and each person's share appears in the Tip Payouts report and the payroll export. If you take your card processor's fee out of card tips, turn on Labor law compliance and Deduct the card processing fee from card tips: Mays deducts only your processor's percentage, split in proportion to each person's card tips, and shows it on the pay period and in the export.
  • The tip-credit make-up is yours to check. Mays doesn't compare a tipped employee's cash wages plus tips with the minimum wage, so check each workweek the way the server example above does.
  • Time clock and timesheets. Staff clock in on their phone, a shared kiosk or an NFC tag. Timesheets run by pay period. Overtime is counted by the workweek, and with Labor law compliance on, by any daily, double-time and seventh-day rule the location's state sets too, which Mays reads from its address; the schedule's labor cost, the reports and the pay summary all include it.
  • Payroll export. A standard CSV or a Gusto-format CSV with regular and overtime hours and pooled tips for each employee. A card surcharge you share with staff goes in as wages, not tips.
  • Minors. Turn on Labor law compliance and work rules for minors at a location, and Mays warns you when a shift breaks a minor's hours or time-of-day limits under federal law, and the auto-scheduler won't put a minor on one. It doesn't track minors' breaks yet, so build a minor's meal break into their shifts when you schedule them.
  • Food protection manager certificate. Turn on Labor law compliance and keep your certified manager's certificate in Mays with its expiry date. Each location shows whether someone there holds a valid one, and Mays reminds them and their managers before it expires.
  • Sales next to labor. Scheduling → Forecast projects each day's sales from your connected point-of-sale history, shows the actual sales once the day is done, and gives the projected labor % of the week's schedule, so you can see what a $4.35 tipped wage or a $7.25 cook does to your labor cost.
  • Starting wages. Set a new hire's hourly wage on their Locations & pay tab at the starting rate, then raise it yourself when their 90 days are up; Mays doesn't track the window. With Labor law compliance on, Mays compares wages with the $7.25 rate, so a new hire paid the $6.35 starting rate gets a below-minimum warning; it never blocks the save.

Sources

Every figure on this page comes from these official pages, as they read on the date shown.

This page is general information, not legal advice. Laws change, and coverage rules (your business's size, whether federal law covers you) decide which of them apply. Check the pages above, and ask an employment lawyer or accountant about your situation.

Run Iowa payroll on the right numbers

Set each position's wage, turn on the tip pool with managers left out, and let the time clock count overtime by the workweek. Then payroll is an export, not an evening.

Start your free trial: 30 days, every module, no card needed. Setting up a tip pool? Read Tip pooling for new restaurant owners.